Financialization and the Increase in Inequality

Authored by: Olivier Godechot

The Routledge International Handbook of Financialization

Print publication date:  February  2020
Online publication date:  February  2020

Print ISBN: 9781138308213
eBook ISBN: 9781315142876
Adobe ISBN:

10.4324/9781315142876-37

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Abstract

Two major evolutions of capitalism marked the two decades preceding the global financial crisis: financialization and a severe increase of inequalities. On the one hand, finance has a growing hold on economic activity, both directly, as shown by near doubling of its share of GDP (moving hence from 5 to 8% in the United States between 1980 and 2007), and indirectly by transforming the management of firms and the savings of households. On the other hand, inequalities in income, wealth and even more wages increased sharply in developed countries, with the top 0.1% of the highest paid workers in the United States tripling their share of wages, from 1.6% in 1980 to 5% in 2007.

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